Australia’s fight against Big Tech: Amazon, eBay under the Canberra microscope in ecommerce probe

By Eric Johansson

Amazon and eBay have been named by Australia’s competition regulator in a new probe aimed at uncovering if big online shopping players choke competition. Given Oz’s reputation as a testbed for tech regulation, lawmakers worldwide may be keeping a close eye on the inquiry, the more so as ecommerce has grown worldwide during the Covid-19 pandemic.

The Australian Competition & Consumer Commission (ACCC) has launched an official inquiry into the online retail industry after receiving “a number of complaints regarding the conduct of general online retail marketplaces”. The complaints include objections to “the quality of goods”, “the timeliness of payment remittance”, how goods get on marketplaces and the consumer support offered on the platforms.

The investigation is part of the market watchdog’s wider five-year Big Tech clampdown. The wider inquiry will publish reports on different aspects of digital platforms’ services every six months. The ACCC’s biannual reports will investigate everything from search engines to social media. The regulator aims to deliver its final report in 2025.

For the ecommerce inquiry, the Australian regulator is now seeking insights from consumers as well as platforms of all sizes and third-party sellers. The deadline for submissions is on the 19 August. The ACCC is planning to publish its final report on the matter on 31 March 2022.

The inquiry will focus on “online platforms that facilitate the supply of general goods between suppliers and Australian consumers” such as Amazon, eBay, and Kogan. It will not look into the conduct of online retailers on their own websites or classified services such as Gumtree and Facebook Marketplace.

Ecommerce received a massive boost around the world during the pandemic. In Australia, online purchases grew by 57% in 2020. Australians doshed out a record AUS$50.5bn ($37.27bn) online last year, up from AUS$27.5bn in 2018.

“These online marketplaces are an important and growing segment of the economy, so it is important that we understand how online marketplaces operate and whether they are working effectively for consumers and businesses,” ACCC chair Rod Sims said.

“We want to be sure that the rules that apply to traditional retail are also complied with in the online context. We are keen to hear about the experiences of Australians, both consumers and businesses.”

Amazon told Reuters that it is “looking forward to engaging with the ACCC on these important topics in the coming months”.

The ecommerce industry, no matter where it may do business, is keeping a close eye on the findings of the ACCC inquiry.

“Given that retail marketplaces are huge global entities, it seems probable international regulators in other markets where the businesses have a footprint will monitor the situation closely,” Gareth Cummings, CTO at ecommerce company eDesk, tells Verdict.

Cummings noted that the complaints about poor customer service would be something regulators could be particularly interested in.

“Regulators globally will want to know why such criteria aren’t being met, particularly if retail businesses continue to profit so significantly and have such a profound economic impact, and that power dynamic will have international implications,” he says.

Big Tech reg testbed

Australia has been busy overturning its digital markets over the past few years, something that has earned the land Down Under a reputation as a testbed for tech regulations worldwide.

The recent shakeup of the financial sector provides a telling example. In 2019, Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry delivered its final recommendations. The two-year investigation had unearthed systemic shortcomings in the industry. These failures had put customers’ money at risk and opened doors for money laundering, terrorist financing and other financial crimes.

Following that probe, Canberra overhauled laws surrounding the financial sector, paving the way for a new wave of fintech startups such as challenger banks Xinja and Volt, which postponed its initial public offering because of the pandemic.

These rules could change even more. The Parliamentary Joint Committee on Corporations and Financial Services currently has the payments markets rules under its scope, checking if they are still restricting competition. Apple has, unsurprisingly, said that it isn’t guilty. Instead, the Apple Pay behemoth has argued that everything is totally fine.

Another telling example occurred earlier this year when the ACCC imposed some of the world’s strictest licencing rules on Facebook and Alphabet’s Google. The rules throttled the Big Tech titans’ ability to make money from news organisations’ content on their platforms without paying the news publishers.

The Canberra proposals for the News Media and Digital Platforms Mandatory Bargaining Code enabled news publishers to negotiate prices with online platforms. If the Silicon Valley giants failed to take their seat at the negotiating table, they could expect fines of up to AUS$10m, or 10% of the companies’ local turnover.

Facebook initially fought back by attempting to block all Australian news on its Australian platform – or at least that’s what it thought. The Menlo Park-headquartered giant inadvertently shut down access to several government health and emergency services as part of this effort, suggesting that Facebook’s automated machinery has some trouble distinguishing what’s news and what’s not.

Facebook eventually joined at Google at the negotiation table, albeit after some changes in the law. In March, Menlo Park signed a three-year deal with News Corp to allow users access to the company’s content via Facebook.

Ecommerce buy-ins

Meanwhile online shopping has grown spectacularly over the past decade – and not just in Oz. Thanks to the growing popularity of the internet, the global ecommerce sector has grown from $399bn in 2010 to $2.2trn in 2020, according to GlobalData’s recent thematic research.

The report notes that the pandemic amplified that expansion of the sector as lockdowns and social distancing added impetus to the migration from offline to online shopping.

“Covid-19 has led to an unprecedented number of high-street closures and caused foot traffic to fall, leaving shoppers with little choice but to purchase items online,” the researchers noted. “Even consumers that had previously been reluctant shop online have embraced ecommerce. Online demand will remain strong post-pandemic.”

However, the industry faces two major obstacles on its road towards further expansions: ensuring sustainability and stricter regulations, such as the ones the ACCC inquiry may lead to.

“I suspect that we’ll start to see even more countries clamp down on these sorts of digital platforms to ensure that complaints around data collection and similar are being handled effectively,” Marcel Hollerbach, CMO at leading data integration company Productsup, tells Verdict.

Interestingly, though, if you’re looking for the sector leader, neither Amazon nor eBay show the most promise to spearhead the market, according to some estimates.

GlobalData’s thematic research scorecard for the ecommerce industry gives that honour to Apple.

“Apple takes the top spot in the ecommerce thematic rankings primarily due to its  tough stance on data privacy,” GlobalData Themes analysts note. “Unlike many of its biggest rivals, Apple doesn’t derive significant revenue from ad sales and does not sell its users’ data. Apple outperforms the tech giants in the data privacy theme, as it offers a level of security and protection to users unmatched by its competitors.”

That being said, Apple did score quite low on other Theme metrics such as mergers and acquisitions, sustainability and regulations.